López Obrador is expected to announce his election to this position at the Central Bank in the coming weeks.
The treasurer of the Ministry of Finance, an experienced entrepreneur, and a career director of the Bank of Mexico (Banxico) are the three women considered the main candidates to occupy a key position on the board of directors of the Central Bank of the country.
President Andrés Manuel López Obrador is expected to announce his election to the position in Banxico within the next few weeks. Treasury Secretary Arturo Herrera could be a surprise election.
The appointment may tip the balance of the bank’s five-member board, when a new deputy governor replaces Javier Guzmán, one of its most aggressive members, early next year.
The president’s two previous elections, Gerardo Esquivel and Jonathan Heath make up the more moderate wing of the Board, having disagreed in the past in favor of faster interest rate cuts. The governor, Alejandro Díaz de León, whose first term ends at the end of 2021, and Irene Espinosa complete the quintet.
The strongly independent central bank surprised economists last week by pausing a cycle of easing that cut rates by 4 percentage points in just over a year. López Obrador had asked the bank to lower rates even further.
Treasury Undersecretary Gabriel Yorio told Bloomberg News in September that the candidate would likely be a woman. Senators must approve the election.
Experts and economists consulted by Bloomberg News point out that the main candidates for the position are:
Borja, who analysts say is a close ally of Herrera, would become the second current member of Banxico’s board of directors to be removed from the post of treasurer in the Ministry of Finance, after Espinosa.
While there is little in the public record about Borja’s views on monetary policy, her record suggests that she would be more moderate at least early in her term, said Gabriel Lozano, chief economist for Mexico at JPMorgan Chase & Co.
Someone with experience in the finance ministry generally has that bias for lower rates, added Lozano, a former Banxico staff member, adding that as time passes, they tend to be neutral and more flexible.
Claudia Alvarez plays
Álvarez, currently the only woman in a CEO position at Banxico, is seen as the preferred choice of Central Bank officials.
Much of her two decades were spent in operations, giving her more experience with the markets than many other longtime central bankers have, said Alonso Cervera, chief Latin America economist at Credit Suisse Group.
It is likely to take the bank’s traditionally more conservative political stance. “She would be more allied to the typical structure of the Central Bank,” said Valeria Moy, director of the think-tank Instituto Mexicano de Competitividad.
Álvarez’s privileged status and her perceived closeness to Díaz de León could work against her in an Administration that has struggled to oust technocrats. López Obrador left the bank for his first two appointments, that of the academic Esquivel and of Health, a former HSBC economist.
Armendariz would have perhaps the most varied experience of any current board member.
She completed her Ph.D. research in Economics at Columbia University under the supervision of Nobel Prize winner Edmund Phelps, worked as a NAFTA negotiator at the Ministry of Finance, and in other banking positions. Since then, she has become famous as a presenter of Shark Tank Mexico and has become a grand champion, Lopez Obrador, on Twitter.
Choosing the 65-year-old candidate would require a creative interpretation of the age requirements for the position. Until now, it has been understood that anyone over 65 cannot join the Board, but the government could argue that Armendariz would be eligible until she is 66 years old.
In an interview, Armendariz stated that she believes she is better able to help Mexico in the private sector, but that she would take the job if the president needed her.
Her appointment would strengthen the moderate wing of the board. There is room for rates to fall to at least 3.75 percent and the bank should adopt negative real interest rates to encourage borrowing, she said.
Questions about Armendariz’s age and her apparent loyalty to the president could make her a “risky” option for the markets, according to Credit Suisse’s Cervera. Investors would fear that “she is more loyal to the president than to the institution,” he said.
Armendariz rejected the idea that it would damage the bank’s autonomy, saying she is well qualified for the job.
Most analysts and insiders consulted by Bloomberg News expect Herrera to stay as Treasury Secretary for another year and then become governor when Díaz de León’s term ends in late 2021.
But there is the possibility that he could put forward his own name for the post of deputy governor.
Herrera commented earlier this month that he will not leave the Ministry of Finance.
If the president takes a more traditional route, former Banxico officials with an opportunity for the job include Lorenza Martínez, currently the CEO of Accenture, and Ana Aguilar, a senior economist at the Bank for International Settlements.
From within the Ministry of Finance, the Undersecretary of Expenses, Victoria Rodríguez, also has possibilities if neither Herrera nor Borja get the position.
Banxico and the finance ministry declined to comment. Spokespersons for the Mexican presidency did not respond to requests for comment.